Industry Insights

The Cobalt Quandary

Once used mostly for niche metallurgical applications, cobalt came into high demand in 2010 with the proliferation of electronics applications. Technology firms, and especially carmakers ramping up electric car production, have become the biggest drivers of rising cobalt demand. Supply is another matter, however, due to the difficulties of cobalt mining. Most of it is derived from a by-product of nickel and copper mining, requiring fresh mining investment for these metals. And, most deposits are located in the notoriously unstable Democratic Republic of Congo.

An expectation that cobalt demand will remain high is based on two assumptions: that demand for EVs will rise rapidly, and that electric car batteries will continue to rely on cobalt. The former is likely, but the latter may not be. The search for ways to lower the cobalt content in lithium-ion batteries is underway, and battery technology is changing. Tesla says that it is “aiming to achieve close to zero usage of cobalt”. This stance contributed to a tumble in the metal’s price this year.

Conditions around sourcing cobalt have gotten the attention of NGOs, several of which have been pressuring battery makers to steer clear of “conflict cobalt”. About a quarter of cobalt mining is done by local “artisanal” miners, who sometimes operate in the territory of big miners and sell their output to cobalt traders. Opinions on artisanal mining are divided, as some groups say that it can help bridge the supply gap. In the meantime, steps are being taken to legitimise the artisanal mining trade in Congo.

Cobalt can be found elsewhere in the world, for example Australia, but not in abundance. Looking beyond terra firma, The Economist suggests that “the biggest source is even trickier than Congo to explore: leagues below the high seas. Much of the floor of the Pacific Ocean is lined with nodules rich in cobalt. If there is not enough in the ground, going underwater is the logical next step.”